Proposed online ticketing service draws scrutiny

June 9, 2000
Web posted at: 2:25 p.m. EDT (1825 GMT)

From CNN Correspondent Carl Rochelle

WASHINGTON (CNN) -- A fledgling Internet ticketing service says it has found a better way to track down bargain airfares.

But the business, which isn’t online yet and doesn’t have a name, already is drawing complaints from critics who say it would have an unfair advantage.

"We’re going to give consumers an unbiased, comprehensive, unbelievably thorough search of information that has never been available before," said Alex Zoghlin, chief technology officer for the proposed service, tentatively called T2.

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"I will search billions of combinations for the consumer every single time to provide them what is truly the lowest fare," he continued. "Our competitors cannot do this."

In a recent demonstration for the media, T2 searched the fares for a flight from Miami to Los Angeles and compared them with the fares on two popular Internet sites. Travelocity.com’s cheapest fare was $528; Expedia.com’s bottom line was $370. T2 said it could get you there for $309.

Travel agents, who question how T2 will go about finding its bargain fares, are among the startup’s critics.

"I understand the T2 company says they’re an independent company, just like other travel agencies. That’s just nonsense," said Paul Ruden of the American Society of Travel Agents. "They’re owned by five of the largest airlines in the country.

"They’re not going to operate in any way that interferes with or goes against the interest of the five, and that’s the problem right there."

Travelocity charges that those backers – United, Delta, American, Northwest and Continental – have cut an exclusive deal with T2, making certain low airfares available only on the new Web site.

"What we are concerned about is that the airline owners of T2 and the other carriers that will be participating have agreed together, in a cartel fashion, and agreed to restrict that flow of data," Travelocity’s Bruce Charendoff said.

There is no such thing, Zoghlin said.

"We have no exclusive arrangement with anybody," he said. "We have access to the same data, the same fares as anyone else."

Billions of dollars at stake

At stake are billions in travel dollars. In 1999, Internet bookings totaled $6.5 billion, and travel officials say that sum will grow to nearly five times that by 2005. About 5 percent of travelers currently buy their tickets online.

The Justice Department is checking out T2, curious about the site’s airline ties.

"Some of the things you look at is: What kind of strategic business information do they share? What is the likelihood that a process can raise concerns?" Assistant Attorney General Joel Klein said.

Aviation watchers on Capitol Hill also plan to take a closer look. "There are clear antitrust implications with the airlines ... running one Web site," said Republican Arizona Senator John McCain, chairman of the Senate Commerce Committee. "If each airline wanted to run one, then that would be another matter, but I think it’s a great danger that could lead to higher airfares for average passengers."

Consumer watchdogs also are concerned that offering Internet-only lowest fares puts those who don’t use the Web at a disadvantage.

"We are not happy to see exclusives in which consumers who do not have Internet access ... do not have access to the best-priced tickets," said Mark Silbergeld of the Consumers Union.

But, others point out, many airlines already offer their own Internet specials.

Despite the criticisms and concerns, T2 is moving forward. It hopes to have an official name soon, and begin taking bookings by late summer.

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